Survey uncovers £25bn change management black hole

High-profile
change management blunders are costing the UK more than £25bn a year.

While
UK businesses undertake at least three major change projects per year, costing
companies £52bn in management charges alone, around half are a complete waste
of time and money.

According
to a new report, The Challenge of Change 2002, UK company boards devote 35 per
cent of their time to managing change. But only half of this time is well
spent, with many mergers, restructures, acquisitions and downsizing operations
being ill-conceived and poorly managed.

Conducted
on behalf of ChangeManagementOnline.com, the survey polled 100 directors and
senior managers in some of the UK’s biggest businesses.

The
survey did manage to find positive things to say about UK businesses and BP
Amoco was cited most frequently as an organisation that has handled major
change well. The company is praised for the way it dealt with four different
change scenarios – the merger between BP and Amoco, structural re-organisation,
the management of environmental issues, and outsourcing the HR function.

General
Electric was cited as another company that has successfully re-invented itself,
acquired new assets and effectively restructured.

However,
the respondents found it much easier to name companies that have failed to
manage change with Railtrack/ British Rail topping the list.

The
national rail operator was criticised for the way the move from public to
private sector was managed and was was deemed to be trying to do too much too
quickly, with poor performance targets in place and not enough buy-in from all
those involved.

Another
company perceived to have managed some aspects of change management poorly was
British Airways. Despite being recognised by some for its change successes, it
was more frequently criticised along with Royal Mail/Consignia, for the way it
has managed its re-branding. Far from disliking the new identities, the
interviewees felt there was a lack of decisiveness at both companies –
highlighted by both organisations dtiching their new identities, with Consignia
re-rebranding itself Royal Mail and British Airways reinstating the Union Jack
tailfins of its aeroplanes.

According
to the study these ‘identity about turns’ reflect one of the major factors that
create most change failures – poor leadership.

More
than 80 per cent of respondents believe boards need to better master the art of
leading during times of upheaval.

A
further issue is people management – almost 80 per cent report that companies
fail to keep the workforce ‘on side’ during the process and cannot handle
resistance to change.

However,
the biggest problem with managing change is forecasting the size and scope of
the task.

For
86 per cent of respondents, boards struggle to gauge how much change is good
for an organisation and misjudge the timescales and business impact

Almost
a third of respondents bring in interim managers or change specialists to help
them progress a major change initiatives. And outsiders are particularly valued
for their fresh approach (80 per cent) and specialist experience (78 per cent)
at managing change. Their ability to challenge board thinking and see through
tough or unpleasant tasks is also seen as a major benefit. Indeed 75 per cent
of the senior managers and directors interviewed view change management as a
specialist skill in its own right.

"Shining
through this study is the realisation that real organisational transformation
is a people issue," said Ron Brender, chairman of Change Management
Online’s parent company Executives Online.

"Companies
are changing so quickly today that few directors or managers have the
opportunity to master the necessary skills before they face their first major
change challenge. This is why so many companies are buying in change management
experts to deliver the board’s vision and change strategy.”

www.ChangeManagementOnline.co.uk

By Ben Willmott

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